Daqo New Energy Announces Unaudited First Quarter Results of 2017

公開日 2017/05/11
Daqo New Energy 
Daqo New Energy Corp. announced its unaudited financial results for the first quarter of 2017.

First Quarter 2017 Financial and Operating Highlights

- Polysilicon production volume of 4,927 MT in Q1 2017, an increase of 100.6% from 2,456 MT in Q4 2016

- Polysilicon external sales volume(1) of 4,223 MT in Q1 2017, an increase of 91.2% from 2,209 MT in Q4 2016

- Polysilicon average total production cost(2) of $8.41/kg in Q1 2017, decreased from $9.98/kg in Q4 2016

- Polysilicon average cash cost(2) of $6.68/kg in Q1 2017, decreased from $7.34/kg in Q4 2016

- Average selling price (ASP) of polysilicon was $16.66/kg in Q1 2017, increased from $14.96/kg in Q4 2016

- Solar wafer sales volume of 22.4 million pieces in Q1 2017, increased from 21.3 million pieces in Q4 2016

- Revenue of $83.8 million in Q1 2017, an increase of 81.8% from $46.1 million in Q4 2016

- Gross profit of $35.9 million in Q1 2017, an increase of 152.8% from $14.2 million in Q4 2016

- Gross margin of 42.8% in Q1 2017, increased from 30.7% in Q4 2016

- Non-GAAP gross margin(3) of 44.0% in Q1 2017, increased from 34.1% in Q4 2016

- EBITDA (non-GAAP)(3) of $41.7 million in Q1 2017, an increase of 136.9% from $17.6 million in Q4 2016

- EBITDA margin (non-GAAP)(3) of 49.8% in Q1 2017, increased from 38.3% in Q4 2016 

- Net income attributable to Daqo New Energy shareholders of $22.9 million in Q1 2017, increased from $4.1 million in Q4 2016 and $8.3 million in Q1 2016

- Earnings per basic ADS of $2.18 in Q1 2017, increased from $0.39 in Q4 2016, and $0.80 in Q1 2016

- Adjusted net income (non-GAAP)(3) attributable to Daqo New Energy shareholders of $24.8 million in Q1 2017, increased from $6.2 million in Q4 2016 and $11.7 million in Q1 2016

- Adjusted earnings per basic ADS (non-GAAP)(3) of $2.36 in Q1 2017, increased from $0.59 in Q4 2016, and $1.12 in Q1 2016


Notes:

(1) Our polysilicon external sales volume excludes internal sales to our Chongqing wafer manufacturing subsidiary, which utilizes polysilicon as raw material for the production of solar wafers. The sales volume is the quantity of goods that have been accepted by customers, and thus the corresponding revenue has been recognized during the period indicated.

(2) Production cost and cash cost only refer to production in our Xinjiang polysilicon facilities. Production cost is calculated by the inventoriable costs relating to production of polysilicon in Xinjiang divided by the production volume in the period indicted. Cash cost is calculated by the inventoriable costs relating to production of polysilicon excluding depreciation expense in Xinjiang, divided by the production volume in the period indicated.

(3) Daqo New Energy provides non-GAAP gross profit, non-GAAP gross margin, EBITDA, EBITDA margin, adjusted net income (loss) attributable to Daqo New Energy Corp. shareholders and adjusted earnings (loss) per ADS on a non-GAAP basis to provide supplemental information regarding its financial performance. For more information on these non-GAAP financial measures, please see the section captioned "Use of Non-GAAP Financial Measures" and the tables captioned "Reconciliation of non-GAAP financial measures to comparable US GAAP measures" set forth at the end of this press release.

Commentary

"We are pleased with the strong financial and operating results we achieved for the first quarter of 2017. I would like to thank our entire Xinjiang polysilicon team for their great efforts to make the first quarter of 2017 our best quarter ever in terms of cost structure, production volume and polysilicon quality. During the quarter, we fully ramped up our Xinjiang polysilicon facility to 18,000 MT annual capacity and achieved full production. Our capacity ramp-up progressed ahead of schedule. We produced 4,927 MT of polysilicon in the first quarter of 2017, an increase of 100.6% as compared to the fourth quarter of 2016. While achieving a substantial increase in sequential polysilicon production volume, we also saw strong demand for our high quality products from our customers, and achieved the highest sales volume in the Company’s history with market share gain,” said Dr. Gongda Yao, Chief Executive Officer of Daqo New Energy.

"Polysilicon market demand weakened towards the end of March, resulting in inventory build-up across the industry with price adjustments reflecting the weakness. We saw market conditions stabilizing towards the end of April with strong demand recovery, as industry poly inventory re-adjusted to a healthy level. Polysilicon pricing also improved meaningfully in late April, with robust customer demand for our high quality polysilicon product. Based on industry forecast, the global PV installations is expected to be approximately 75-80GW for 2017, compared to approximately 75-78GW for 2016. Overall, the annual PV volume demand for this year is anticipated to be rather evenly spread between the first and the second half of the year. While the PV end market demand environment is very dynamic and may lead to polysilicon ASP volatility, we believe overall volume demand for the year is solid and healthy. Our cost leadership should help the Company to weather through the market volatility."

"During the quarter, we also achieved the lowest ever cost structure with total production cost of $8.41/kg and cash cost of $6.68/kg. With our lower production cost, the company generated $22.9 million in net income attributable to Daqo New Energy shareholders and $41.7 million in EBITDA with EBITDA margin of 49.8%. In addition, thanks to various quality improvement projects we initiated starting from the second half of last year, the first quarter of 2017 was the best quarter in our history in terms of product quality." 

"Going forward, we will continue to focus our efforts on cost reduction. We have identified several cost reduction opportunities, which should allow us to continue to reduce our cost. At the same time, we continue to pursue various programs and initiatives on polysilicon quality improvement, which will help the company to meet the growing demand for ultra-high-purity polysilicon, such as demand from mono-crystalline wafer manufacturers and potentially even manufacturers of semiconductor wafer applications. These initiatives should increase our corporate flexibility and reinforce our competitive position as one of the leading polysilicon suppliers in China, which will allow us to take advantage of additional opportunities in 2017 and beyond."

Outlook and Q2 2017 guidance

The Company expects to produce 4,800 MT to 5,000 MT of polysilicon and sell approximately 4,200 MT to 4,500 MT to external customers during the second quarter of 2017. The above external sales guidance excludes shipments of polysilicon to be used internally by our Chongqing solar wafer facility, which utilizes polysilicon for its wafer manufacturing operation. Wafer sales volume is expected to be approximately 23.5 million to 24 million pieces in the second quarter of 2017. 

This outlook reflects our current and preliminary view as of the date of this press release and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties. See "Safe Harbor Statement" at the end of this press release.

First Quarter 2017 Results

Revenues

Revenues were $83.8 million, an increase of 81.8% from $46.1 million in the fourth quarter of 2016 and 45.3% from $57.7 million in the first quarter of 2016.

Revenues from polysilicon sales to external customers were $70.4 million, an increase of 114.6% from $32.8 million in the fourth quarter of 2016 and 76.4% from $39.9 million in the first quarter of 2016. External polysilicon sales volume was 4,223 MT, an increase of 91.2% from 2,209 MT in the fourth quarter of 2016 and 45.4% from 2,905 MT in the first quarter of 2016. The average selling price (ASP) of polysilicon was $16.66/kg in Q1 2017, an increase of 11.4% from $14.96/kg in Q4 2016. The increase in polysilicon revenues as compared to the fourth quarter of 2016 was primarily due to higher polysilicon sales volume and higher ASPs.

Revenues from wafer sales were $13.4 million, compared to $13.4 million in the fourth quarter of 2016 and $17.8 million in the first quarter of 2016. Wafer sales volume was 22.4 million pieces, compared to 21.3 million pieces in the fourth quarter of 2016 and 22.1 million pieces in the first quarter of 2016.

Gross profit and margin

Gross profit was approximately $35.9 million, an increase of 152.8% from $14.2 million in the fourth quarter of 2016 and 115.0% from $16.7 million in the first quarter of 2016. Non-GAAP gross profit, which excludes costs related to the non-operational polysilicon assets in Chongqing, was approximately $36.9 million, an increase of 133.5% from $15.8 million in the fourth quarter of 2016 and 95.2% from $18.8 million in the first quarter of 2016.

Gross margin was 42.8%, increased from 30.7% in the fourth quarter of 2016 and 29.0% in the first quarter of 2016. The increase in gross margin as compared to the fourth quarter of 2016 was primarily due to higher quarterly polysilicon ASPs and lower polysilicon production cost.

In the first quarter of 2017, total costs related to the non-operational Chongqing polysilicon assets including depreciation were $1.0 million, decreased from $1.6 million in the fourth quarter of 2016 and $2.0 million in the first quarter of 2016. As we have already relocated the majority of the idle equipments from our Chongqing site to Xinjiang site and successfully reutilized them in our capacity expansion projects, the total costs related to the non-operational Chongqing polysilicon assets have been significantly reduced. In the near future, we expect such costs will remain at a level that is similar to that in Q1 2017. Excluding costs related to the non-operational Chongqing polysilicon assets, the non-GAAP gross margin was approximately 44.0%, increased from 34.1% in the fourth quarter of 2016 and 32.6% in the first quarter of 2016.

Selling, general and administrative expenses

Selling, general and administrative expenses were $4.1 million, compared to $3.5 million in the fourth quarter of 2016 and $4.1 million in the first quarter of 2016. 

Research and development expenses

Research and development expenses were approximately $0.4 million, compared to $2.8 million in the fourth quarter of 2016 and $0.1 million in the first quarter of 2016. The research and development expenses fluctuate from period to period according to the R&D activities occur in such period.

Other operating income

Other operating income was $0.8 million, compared to $1.9 million in the fourth quarter of 2016 and $0.7 million in the first quarter of 2016. Other operating income was mainly composed of unrestricted cash incentives that the Company received from local government authorities, the amount of which varies from period to period.

Operating income and margin

As a result of the foregoing, operating income was $32.2 million, an increase of 235.4% from $9.6 million in the fourth quarter of 2016 and 142.1% from $13.3 million in the first quarter of 2016.

Operating margin was 38.4%, increased from 20.7% in the fourth quarter of 2016 and 23.1% in the first quarter of 2016.

Interest expense

Interest expense was $4.3 million, compared to $4.1 million in the fourth quarter of 2016 and $3.9 million in the first quarter of 2016.

EBITDA

EBITDA was $41.7 million, an increase of 136.9% from $17.6 million in the fourth quarter of 2016 and 90.4% from $21.9 million in the first quarter of 2016. EBITDA margin was 49.8%, increased from 38.3% in the fourth quarter of 2016 and 38.0% in the first quarter of 2016.

Net income attributable to Daqo New Energy Corp. shareholders and earnings per ADS

Net income attributable to Daqo New Energy Corp. shareholders was $22.9 million in the first quarter of 2017, increased from $4.1 million in the fourth quarter of 2016 and $8.3 million in the first quarter of 2016. 

Earnings per basic ADS were $2.18, increased from $0.39 in the fourth quarter of 2016 and $0.80 in the first quarter of 2016.

Financial Condition

As of March 31, 2017, the Company had $61.2 million in cash and cash equivalents and restricted cash, compared to $31.9 million as of December 31, 2016 and $35.7 million as of March 31, 2016. As of March 31, 2017, the accounts receivable balance was $13.1 million, compared to $4.8 million as of December 31, 2016. As of March 31, 2017, the notes receivable balance was $11.7 million, compared to $13.0 million as of December 31, 2016. As of March 31, 2017, total borrowings were $236.0 million, of which $129.2 million were long-term borrowings, compared to total borrowings of $217.9 million, including $111.9 million long-term borrowings, as of December 31, 2016.

Cash Flows

For the three months ended March 31, 2017, net cash provided by operating activities was $28.6 million, increased from $22.5 million in the same period of 2016.

For the three months ended March 31, 2017, net cash used in investing activities was $16.6 million, compared to $17.5 million in the same period of 2016. The net cash used in investing activities in 2017 was primarily related to the capital expenditure of Xinjiang Phase 3A polysilicon projects.

For the three months ended March 31, 2017, net cash provided by financing activities was $16.5 million, compared to net cash used in financing activities of $3.3 million in the same period of 2016. The increase was primarily due to drawdown of long-term project bank loans. 


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